Cabcharge counts on cards

Cabcharge
is counting on investments in technology via a contactless card system to add to growth driven by the economic recovery.

The taxi payments company’s revenue rose 5.3 per cent in the first quarter of the financial year compared with the previous corresponding period and net profit rose 15.5 per cent, driven by higher taxi fare expenditure, a domestic recovery and improved results on its bus joint venture. The figures were revealed at the company’s annual general meeting in Sydney yesterday.

Cabcharge expects increased contributions from its local bus partnership, ComfortDelGro Cabcharge, whereas returns from its joint venture in the United Kingdom, CityFleet UK, are not predicted to improve in the short term. This business has been hit by the downturn in the financial sector, the strengthening Australian dollar and major cuts to UK government expenditure.

Following the settlement of an Australian Competition and Consumer Commission court case against the group, Cabcharge will implement a trade practices compliance program, which executive chairman Reg Kermode said he took “very seriously".

Broker Moelis & Company interpreted this to mean that if rival eftpos operators applied to be able to process Cabcharge cards on commercial terms, then Cabcharge would not be able to refuse.

The company settled the misuse of market power proceedings brought by the ACCC in September. It agreed to pay a $15 million penalty, including $1 million in ACCC costs, after admitting to three contraventions of the Trade Practices Act. This represents the largest penalty imposed for a misuse of market power case brought by the ACCC.

Cabcharge will activate a contact-less card system next February, with magnetic stripe Cabcharge cards to be replaced with chip-enabled cards. This will mean less reliance by consumers on cash for transactions under $100.

Mr Kermode said the payments industry was about to “radically change" and contact-less technology would be a “significant driver of growth, over time, for many types of taxi fares currently paid in cash".

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Moelis & Company analyst Adam Michell said he was “not convinced that this will be a long-term barrier to entry to rival eftpos operators who wish to process Cabcharge cards as they can simply replace their mobile terminals with contact-less technology".